Retirement Funds & Schemes

The Special Funds (Regulation) Act 2002 (the Act) inter alia sets out the regulatory framework for the establishment of Pillar Two retirement funds and schemes.

A scheme including an Overseas Retirement Plan is defined as a scheme or arrangement established by contract which governs the rights and responsibilities of the Retirement Scheme Administrator and Contributor thereto, and in terms of which payments are made to Beneficiaries for the principal purpose of providing retirement benefits.

Retirement Schemes may be established as either Defined Benefit Schemes or Defined Contribution Retirement Schemes.  A Defined Benefit Scheme provides for the payment of fixed or determinable retirement benefits.  On the other hand, in the case of a Defined Contribution Retirement Scheme, the retirement benefits are established on the basis of the contributions paid into such scheme and the accumulation of profits, gains and other income, after the deduction of expenses and losses in relation thereto.

The retirement scheme is administered by the Scheme Administrator with the contributions towards such a scheme being invested exclusively in one or more Retirement Funds which satisfy the requirements of the Act and this in terms of the written contract evidencing the Registered Scheme.

The terms “Retirement Fund” refer to a company established for the principal purpose of holding and investing the contributions made to one or more Schemes or to one or more Overseas Retirement Plans.

Retirement Funds and Schemes situated in Malta shall be registered with the Malta Financial Services Authority.  The terms and conditions of a scheme must be clearly set out in the Scheme Document.  In fact, the Act provides for a series of requirements that must be included in the Scheme Document for the Scheme to qualify for registration.

A Retirement Fund in order to be eligible for registration, must be registered as an investment company with fixed share capital or an investment company with variable share capital, with its objectives being limited to those prescribed in the Act.

The board of directors of a Retirement Fund shall be responsible either directly or through an Asset Manager registered under the Act to invest all the fund’s assets in accordance with its Memorandum of Association. It shall also be the duty of the board of directors to appoint a Retirement Fund Administrator to carry out the ordinary or day-to-day operations of the Retirement Fund.

The Act also prescribes that every scheme shall have a Retirement Scheme Administrator appointed by the Contributors of the Scheme, who is to perform all duties in connection with the ordinary operations of the Scheme.

The firm is in a position to assist clients in the pensions area both in the setting up process and on an on going basis thereafter.

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